JP Morgan Chase 2010 Annual Report Download - page 73

JPMorgan Chase & Co./2010 Annual Report
73
Noninterest revenue was $12.2 billion, up by $2.8 billion, or 30%,
driven by the impact of the Washington Mutual transaction, wider
margins on mortgage originations and higher net mortgage
servicing revenue, partially offset by $1.6 billion in estimated losses
related to the repurchase of previously sold loans.
The provision for credit losses was $15.9 billion, an increase of
$6.0 billion from the prior year. Weak economic conditions and
housing price declines continued to drive higher estimated losses
for the home equity and mortgage loan portfolios. The provision
included an addition of $5.8 billion to the allowance for loan
losses, compared with an addition of $5.0 billion in the prior year.
Included in the 2009 addition to the allowance for loan losses was
a $1.6 billion increase related to estimated deterioration in the
Washington Mutual PCI portfolio. See page 130 of this Annual
Report for the net charge-off amounts and rates. To date, no
charge-offs have been recorded on PCI loans.
Noninterest expense was $16.7 billion, an increase of $4.7 billion,
or 39%. The increase reflected the impact of the Washington
Mutual transaction and higher servicing and default-related
expense.
Selected metrics
As of or for the year ended
December 31, (in millions, except
headcount and ratios) 2010 2009 2008
Selected balance sheet data
(period-end)
Assets
$
366,841
$ 387,269 $
419,831
Loans:
Loans retained
316,725
340,332 368,786
Loans held
-
for
-
sale and loans
at fair value(a) 14,863 14,612 9,996
Total loans
331,588
354,944 378,782
Deposits
370,819
357,463 360,451
Equity
28,000
25,000 25,000
Selected balance sheet data
(average)
Assets
$
381,337
$ 407,497
$ 304,442
Loans:
Loans retained
33
1,330
354,789 257,083
Loans held
-
for
-
sale and loans
at fair value(a) 16,515 18,072 17,056
Total loans
347,845
372,861 274,139
Deposits
362,386
367,696 258,362
Equity
28,000
25,000 19,011
Headcount 121,876 108,971 102,007
As of or for the year ended
December 31, (in millions, except
headcount and ratios) 2010 2009 2008
Credit data and quality
statistics
Net charge-offs
$
7,906
$ 10,113 $
4,877
Nonaccrual
loans:
Nonaccrual loans retained
8,768
10,611 6,548
Nonaccrual
loans held
-
for
-
sale and loans at fair value 145 234 236
Total nonaccrual loans
(b)(c)(d)
8,913 10,845 6,784
Nonperforming assets
(b)(c)(d)
10,266 12,098 9,077
Allowance for loan losses
16,453
14,776 8,918
Net charge-off rate(e) 2.39%
2.85% 1.90%
Net charge
-
off
rate excluding PCI
loans(e)(f) 3.11 3.75 2.08
Allowance for loan losses to
ending loans retained(e) 5.19 4.34 2.42
Allowance f
or loan losses to
ending loans excluding
PCI loans(e)(f) 4.72 5.09 3.19
Allowance for loan losses to
nonaccrual loans
retained(b)(e)(f) 131 124 136
Nonaccrual
loans to total loans
2.69
3.06
1.79
Nonaccrual
loans to total loans
excluding PCI loans(b) 3.44 3.96
2.34
(a) Loans at fair value consist of prime mortgages originated with the intent to sell
that are accounted for at fair value and classified as trading assets on the
Consolidated Balance Sheets. These loans totaled $14.7 billion, $12.5 billion
and $8.0 billion at December 31, 2010, 2009 and 2008, respectively. Average
balances of these loans totaled $15.2 billion, $15.8 billion and $14.2 billion
for the years ended December 31, 2010, 2009 and 2008, respectively.
(b) Excludes PCI loans that were acquired as part of the Washington Mutual
transaction, which are accounted for on a pool basis. Since each pool is
accounted for as a single asset with a single composite interest rate and an
aggregate expectation of cash flows, the past-due status of the pools, or
that of the individual loans within the pools, is not meaningful. Because the
Firm is recognizing interest income on each pool of loans, they are all
considered to be performing.
(c) Certain of these loans are classified as trading assets on the Consolidated
Balance Sheets.
(d) At December 31, 2010, 2009 and 2008, nonperforming assets excluded: (1)
mortgage loans insured by U.S. government agencies of $10.5 billion, $9.0
billion and $3.0 billion, respectively, that are 90 days past due and accruing
at the guaranteed reimbursement rate; (2) real estate owned insured by U.S.
government agencies of $1.9 billion, $579 million and $364 million,
respectively; and (3) student loans that are 90 days past due and still
accruing, which are insured by U.S. government agencies under the Federal
Family Education Loan Program (”FFELP”), of $625 million, $542 million
and $437 million, respectively. These amounts are excluded as
reimbursement of insured amounts is proceeding normally.
(e) Loans held-for-sale and loans accounted for at fair value were excluded
when calculating the allowance coverage ratio and the net charge-off rate.
(f) Excludes the impact of PCI loans that were acquired as part of the
Washington Mutual transaction. These loans were accounted for at fair
value on the acquisition date, which incorporated management's estimate,
as of that date, of credit losses over the remaining life of the portfolio. An
allowance for loan losses of $4.9 billion and $1.6 billion was recorded for
these loans at December 31, 2010 and 2009, respectively, which has also
been excluded from the applicable ratios. No allowance for loan losses was
recorded for these loans at December 31, 2008. To date, no charge-offs
have been recorded for these loans.